On
March 28 Wired.comreportedly received
an unbelievable email claiming that a tipster had obtained a
misplaced fourth generation iPhone. According to the site, they
entered a brief discussion about coverage on the device. The
discussion quickly terminated though when the source start hinting he
wanted money. Wired declined
to buy possibly stolen property and thus walked away from the year's
biggest tech scoop.

Gizmodo on
the other hand had took
the bait. Now, not long after police raided the home of a
Gizmodo editor,
police reportedly have located the seller as well.

A source
close to the transaction is quoted by Wired.com as
claiming that the seller made an earnest effort to return the phone
to Apple. They claim they tried to contact Apple and searched
for the iPhone user on Facebook, but couldn't find them.

They
claim the $5,000 "sale" described by Gizmodo was
really merely for an exclusivity agreement, not the sale of the
actual device. Describes the source, "The idea wasn’t to
find out who was going to pay the most, it was, Who’s going to
confirm this?"

The finder is reportedly a college-aged
Silicon Valley man.

If the search
warrant against Chen is any indication, the man may soon
face criminal charges. Police obviously aren't buying the
exclusivity fee claim, particularly after Gizmodo admitted
in writing to buying the phone and numerous staffers at the site
commented on the device's purchase, including site owner and Gawker
President Nick Denton.

The police reason that if the finder
wanted to return the phone, why didn't he just turn it in to police?
That, after all, is the legal approach if you discover something
valuable that didn't belong to you.

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The police have some case against the seller but then again it has some weaknesses. There is no requirement to give something to the police or the owner of an establishment but you then assume all the responsibility so it is the wisest choice. There is also no crime in not doing so thinking you could get a reward for its return (although you cannot demand one). You do not have to place any ads if you have an idea who owns the device but you should make sure you can document your efforts to contact them. The problem he has is when (if) Apple told him it was not theirs he should have placed an ad and waited since presumably he now does not know the owner. He certainly made a serious mistake in selling the item since it put him in the place of depriving the owner of their property. Although not a valuable if he waited a year after placing the ads he still would have had a collector's item that would be valuable and legally his (provided Apple is not saying it was obtained by pick pocketing) and here again any contact initiated by him to Apple would pretty much destroy that case.

Gizmodo will probably be paying nothing, the EFF will more than likely do this for free. The police have NO case and I believe the search will be declared illegal and possibly open the police and the city to a lawsuit. To prove receivership of stolen goods they have to PROVE either Gizmodo paid the guy to get the item in question, or had knowledge the item was stolen AND real and they planned to permanently deprive Apple of the item (this if KEY in a receiving of stolen goods case). It's perfectly legal to buy something and lose your money by returning it to the owner. All Gizmodo has to do is say they were not 100% sure it was even real and that they planned to return it to Apple if it was and the police have to PROVE they did not think that way (pretty hard to do beyond a reasonable doubt). They have already documented that once they got the item and determined it was in fact real they initiated contacted with Apple. Now I'm not sure of this but I believe the item was sent directly back to Apple by their request (they did not send the police to pick it up), IF that happened the seller may even get a pass because now the phone itself is totally inadmissible as evidence since the chain of custody has been broken. The police have to get it from Gizmodo directly to connect it with the seller and Apple cannot get it back until either the criminal investigation is dropped or the trials are over. It is supposed to be evidence but now I cannot see it being allowed.

IF it goes to any trial it will be interesting since any competent defense will request ALL of Apples internal e-mails and their phone records from the period in question and they will totally grill the employee about this "theft" that could answer questions about the incredible timing of the release of this story. If this case just gets dropped then there should be some form of investigation to determine if Apple used the police to intimidate the press. This sets a BAD precedent; if it goes unchallenged then expect the police to use the excuse of "a felony has been committed " to size any news agencies records and that would be worse for all of us in the long run.